Banks

A long time ago, I got rid of my SUN shares because it was perceived as an insurance company.  After years and years of sustaining losses on my NAB shares, I also got rid of it about 2 years ago.

However, I have not topped up my other bank shares but neither would I sell any.  The dividends are better than putting the money into fixed deposits.  And in recent weeks, they have run up fast.  Today my ANZ is break even, while my WBC has been above average while CBA, my biggest holding, is powering ahead.

The history behing CBA is interesting.  During first privatisation, I had no spare cash (paying off my mortgage) but I participated in the second tranche.  Most of my CBA came via State Bank Of NSW.  I made a huge paper gain when it was swallowed up by CBA.  CBA has been a slow but rewarding investment.  I have no intention of selling any bank shares as I grow older.  In Australia, it is THE safest sector to park your money in.

AUD

AUD is rising against a big basket of currencies.  This is very bad news for our economy.  I suspect with POG going up as well.... the Feds must have started printing USD.  I don't think this will last long as China's economy is faltering.  You can't make much profit if your customers are not buying.

European woes

Yesterday, the ECB boss announced that it will support the Euro.  The markets rallied everywhere after that.  But you ponder why that is so significant.  Why would the ECB not protect the Euro?

Consequently, the ASX All Ords will rise today too, following like a poodle.  But all financial problems are still there; only the rhetorics are variable.  Today is definitely not a good day to buy unless someone is dumping shares.

ABU

http://minesite.com/news/andrew-ferguson-joins-abm-resources-in-its-hunt-for-gold-riches-in-the-tanami-region-of-australia

Looks like slowly and surely, someone is recognizing the value of ABU.  Perhaps, the institutions knows never to touch anything Mr Lee Ming Tee touches.  Be aware that this guy is a pure money man; he is not there to look after shareholders.  However, his investment has probably found Lasseter's reef....

I left my buy at 3.7c but I suspect with POG up and DJI racing ahead, I have just missed the trough at 3.8c but I have collected enough parcels of ABU.  I have bought 14 times!

POG

Watching the POG going up and down is more dramatic than playing with a yo-yo.  As I had said earlier, this is not merely a demand-supply issue but the hallmark of a manipulator or rich investor.  What I am interested in, is the trend.  Overall, POG has been relatively stable although it did spike to over USD$1900 per oz in the last year.  But that was spike, not a trend.

Yesterday, when the market has closed, I noticed that I have collected a small parcel of OYM to top up my dwindling (in value) holding.  If an explorer-cum-producer keeps uncovering gold, it is difficult for me to ignore it.  I had also put a low at 3.7c for ABU for some time now but I just missed out on it yesterday.

RMP and RRS

Instead of finding oil in Puntland, they found water!  But water in the desert is not a bad discovery.... except that it is too deep to pump out from.  The market is going to lop their share price off.  But it is a bit too early.  That is only one hole and it is drilling further to another zone.  Market does not kindly to bad announcements.  Even good announcement can be ignored or savaged.

When you invest in explorers, you have to be aware of the very high risk and the dramatic outcome of success or failure.  And failures are much more common.  So far, most of oil explorers are duds!  But you can actually trade and play with them before the final outcome.  However, if the big boys move into their tenements, then you know perhaps it is better to keep holding them.

Short selling

Platinum Fund Australia used to make a lot of money out of its European Fund while the markets were tumbling.  The managers were perceived as brilliant.  When it floated, I dumped all my shares in it to collect a massive stag profit.  I didn't have any urge to buy those shares back.  Why?  There is nothing brilliant about short selling.  Personally, it is an evil scheme and it demolishes values of shares 'owned' by mums and dads, manipulated by savvy finance 'experts'.  Kerr Nielson became one of Australia's richest men after the float.  But look at what has happened to the share price of that stock now.  He has made money out of people thinking how brilliant he WAS.

Spain and Italy banned short selling recently.  They should have done it earlier.

If you want to know what stocks to buy in turbulent depressing times like now, follow my late father's advice:  Choose good business that pays GOOD dividend consistently, i.e. dividends out of profit, not of out borrowed capital.  This advice was from someone who went to school for only 2 years and was a pauper but was able to accumulate enough wealth for many of his 10 children to live comfortable in Malaysia off their share of the inheritance.  And my mother has enough dough to make sure she is well-looked after.

Selling

This is my most difficult decision... when to sell?

For those who bought CTP and enjoyed the recent run in share price, it is time to ponder whether to realize your capital.  If the next drilling hits good oil or gas, of course, the share price will run.  Or if a big boy wants to join in, then it will run too.  But one must remember, a profit is a profit.  And if you watch the share price, then you might be able to buy back at a lower price, too.

PCL

When share prices were tumbling hard in May and June 2012, I could not believe my eyes that someone had dumped PCL shares;  I put in a low bid at 13.5c to buy but it went even lower to 13c.  Today it closed at 20.5 but in late March 2012, it went to 24c.

Some of my most spectacular gains have been stocks bought when the markets were dumping.  I expected my PCL top-up would be my best buy.... and I am proven right.  Of course, there are also disasters.  The reason for not highlighting them is that the market is still down so I didn't expect a turnaround.  But PCL did not disappoint.

Continental Drift

South America and Africa were once linked.  Hence if you find gold on the eastern side of South America, you will find gold on the corresponding side of Africa.  There have been good oil hits off the coast of Brazil.  PCL put out an announcement today as it increased its share of tenement in offshore Namibia.  This part of Africa will only fly when big hits are found.... or when the big boys start to move-in or buy out the junior partners.

I have already done extremely well with PCL and now it is increasing its holding in offshore Namibia.

Bad day...

Today is a bad day on the market for me.  One portfolio plunged more than the market average, mostly due to falling resource stocks.

But in the midst of all this, CTP is a nice performer.  Last year, when its share price was at its doldrum and a SPP that had a grossly extended dateline, it announced that it had found oil.  Yet the market was not fully convinced and lots of people didn't take up the SPP even though the share price has gone over the SPP price.  I took up the offer late and picked up the maximum amount.  Today, it has more than doubled.  And now because I have "many" shares, a 1c rise makes a huge difference.

DJI rose!

The chairman said the performance of the US economy is worse than expected and the rate of growth is slowing.... and DJI rose!  How people interpret!  What they are interested in is the short term prospect of a stimulus. "Something has to be done".

Longer term?  It is bad news and Europe, China and Japan are not going to blossom suddenly.

The Feds

When Ben Bernanke speaks, the whole world listens.  He speaks tonight to the Congress.  The markets are optimistic that he will throw money around.  But I am not.  There is no good economical reason for the market to climb today.  If China pours money into its economy, then the ASX All Ords should rise.

We have become shar-peis, not Yankee poodles.  Actually, we are both but these days, the ASX is more determined by China than Dow Jones.  Interestingly, the banks are the ones doing very well today.  I don't sell any of our bank shares these days; better than putting the money into fixed deposits.  I learned this from my father, ie don't sell if the dividends are going to be better than interest payments.

SXY

One failed exploration result does not make a stock a bad one, especially when it has other successful hits.  SXY has been falling and falling, in line with the general market trend.  Its recent rights issue must be a failure because at 74c, it is much higher than the market price when the offer closed.  I put in a bid at 67c and collected a small top up.  Of course, it is impossible to get it at the trough.

So today, when it has a successful hit with oil flowing to surface at more than 2000 bopd, it has a little jump.  This is one few stocks that I have bought in the recent weeks.

ABU

http://www.proactiveinvestors.com.au/companies/news/31341/abm-resources-old-pirate-yields-new-vein-with-126m-at-4237gt-gold-31341.html

Trenching sample at 126m at 42.37g/t of Au.  The vein varies from 4m to 10cm.  Is that so insignificant that the share price only went up by 0.1c?  At this stage, we don't know how deep it is but it is taken from beyond the area with a JORC resource.  In my lay opinion, it is eye-popping but "experts" must know better.

Yo-yo

Don't bother buying a yo-yo; just watch the price of gold bouncing up and down.  And it bounces spectacularly.  What this tells me is that it is not merely a supply demand thing but market manipulation.

RB wrote recently that $1 spent by successful gold explorers found 11oz of gold in the last decade.  That is a good reward!  But it has to be compared.  In the past, that $1 resulted in much more gold uncovered; 105oz in the 1960's.  And gold demand is outstripping gold discovered.  All these bode well for gold... except that gold is not actually "consumed".  If big hoarders sell their bullion, then the POG will crumble.  Fortunately, central banks cannot just dump their gold reserves.

Hence I am still a gold optimist.  At the current PG, a lot of my gold producers are still profitable.  I have put a low buy for ABU but I doubt it will get to that level.  But I am always happy to help desperados.

OYM

Most gold stocks are out of favour.  Surprisingly, this one is in production!  And will be producing more out of a mine in Sarawak.  The scores have been good but market is only interested in failures currently.

The mines in Vietnam are subjected to communist idiosyncrasy, so are not highly profitable.  There are all kinds of taxes and charges to make it unworthy for western companies to go there.  Just ask BHP!

http://minesite.com/news/olympus-pacifics-gold-production-could-increase-to-200-000-ounces-per-year-if-the-current-feasibility-study-at-bau-proves-favourable

I don't know how much debt this stock carries but with repeated good exploration results coming from Bau in East Malaysia, it is rather disappointing that the share price continues to fall.  I like this kind of company where market is not behaving rationally and I get to top up at a low price.  However, this year, the contribution to my super fund has been curtailed by Uncle Wayne so cash for investment has shrunk.

SXY

SXY had a rights issue at 74c recently which closed on the 11/7/12; the market price had come down to below 70c.  It had some failures and some successes with its recent explorations but market is only interested in punishing the failures.  When I first bought into this stock (VPE before the name change), I promptly sold off one parcel for a stag profit.  And kept the other one.  At that time, it was the right decision to sell but when VPE started to drill successfully in the Cooper Basin, the price has been rising... until recently.

Several days earlier, I had put in a buy at nearly 10% lower than the "failed" rights issue.  As usual, you then wished you put the buy bid at a lower price but I am happy with the top-up at 67c.  Since the price of oil/gas is falling, I don't expect SXY to go up soon.... unless it hits a good oil/gas column.

I love buying when the markets are falling.... but it is impossible to pick where the trough is.  And with little logic for market movement, I am mostly sitting on the sideline.

GRY

It isn't just me lamenting.  Actually, I am not lamenting because I don't have to sell.  I have just read "Around the Traps... with the Ferret", an article by someone from Goldman Sachs J B Were..

When a stock announces whatever bad news, it gets savaged.  But the reverse is not true either.  Here we have GRY doubling its resource estimate to 4.5 million oz of gold and the market marked it down!  And it continued its downwards trend!  A year ago, it was worth $2.05 and now under 65c.

I am not lamenting because I am looking forward to help those desperate sellers!

Speeding ticket...

It is fantastic when any of my stocks gets a speeding ticket for moving upwards too quickly without any apparent reason.  So I can't tell you why either.  Gurus will tell you to take profit but I will sit and watch with PCL, mostly because the neighbours are getting hits with their drilling results.  Not very recently but recently.

http://www.proactiveinvestors.com.au/companies/news/31176/whl-energy-pancontinental-oil-and-gas-and-far-make-gains-on-east-african-oil-and-gas-interest-31176.html

I am however surprised that CTP, PIR and SIH didn't get a speeding ticket.  It is obvious that the rise is not big enough but I had beautiful jump in their values today.  I had accumulated lots of shares in these stocks when they were "el cheapos" so now a 1c rise makes a huge difference to the value of the stock.

I am still watching ABU as it is starting to drift downwards again.  It is truly unbelievable that a stock that continues to deliver good trenching results is being sold off.  Of course, trenching results are not indicative of a large resource.... but it does imply that.  I have seen some gold stocks jumped when the trenching results are pathetic compared to ABU's.  Maybe, it is because ABU only explores (ie digs) known veins of gold rather than 'random' sampling.

Swiss Franc

AUD is reaching parity with the Swiss Franc!  While it is an achievement, it isn't great for the economy.  AUD is now over-valued while China is decelerating, the USA and Japan are still performing poorly and Europe is decaying.

What does this mean to the ASX?  Nothing except Australian stocks earning foreign currencies will be adversely affected by the rise of the AUD.

Lemmings

Today, GRY and ABU had good announcements.  And PRU, too but not as great.

Yet, the market is in a dark mood today.  POG has gone up and gone down but it is still over USD$1550 per oz.  Maybe, the "experts" are expecting the collapse of gold price.  But central banks cannot offload their gold hoard as it will affect adversely the value of the remaining gold in their vaults.  The Chinese and Indians are still buying gold for what it was and what it is.

Like most days, when the markets swing, my portfolios go ballistics... either way.  I was ready to pounce if investors want to sell ABU cheaply but it didn't move today.  And GRY and PRU didn't drop down enough for me.

ABU

Even with the POG up during late last week, the share price was languishing below 3.8c.  On Friday, it climbed to 4.4c.  Unfortunately, on Monday, it will fall again as the POG took a tumble on Friday overseas market.  Hence ABU will stumble again.  This is one stock that can keep making good announcements about its discoveries but the market will hammer it!  The market wants big unexpected pleasant surprises, not just good grades, shallowness or thickness of the finds.

I last topped up in mid May 2012 at 3.9c.  Time to look at it again if there is a plunge on Monday.

PIROA

My average buy price for PIROA is under 20c.  And today, after a good maiden resource announcement at just over 3 million oz of Au, its share price jumped.  In Dec 2012 if Mali is not overrun by Islamists or the country does not crumbled into a major civil war, then the share price should fly.  And the exploration has only covered a small area.

Is it too late to buy now?  Inshallah!  This is not a stock that I have only just recently talked about!  When the military coup first occurred recently, the share price came tumbling down.  The only good news is the tenements are in West Mali.

NGE

Sometimes there is share price play when a stock has not found anything.  Why?  Because a big boy wants your tenement or to farm-in.  This is happening with NGE, and not just one big boy but several have moved into their tenements.

Other stocks that might benefit include PVD, WHN and CTP.  My most successful play is PCL.